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Covering more than 80,000 commercial products, India’s chemical industry is extremely diversified and can be broadly classified into bulk chemicals, specialty chemicals, agrochemicals, petrochemicals, polymers and fertilisers. Globally, India is the fourth-largest producer of agrochemicals after the United States, Japan and China. India accounts for ~16% of the world production of dyestuffs and dye intermediates. Indian colorants industry has emerged as a key player with a global market share of ~15%. The country’s chemicals industry is de-licensed, except for few hazardous chemicals. India holds a strong position in exports and imports of chemicals at a global level and ranks 14th in exports and 8th in imports at global level (excluding pharmaceuticals). The domestic chemicals sector's small and medium enterprises are expected to showcase 18-23% revenue growth in FY22, owing to an improvement in domestic demand and higher realisation due to high prices of chemicals. India’s proximity to the Middle East, the world’s source of petrochemicals feedstock, enables it to benefit on economies of scale.
The Indian chemicals industry stood at US$ 178 billion in 2019 and is expected to reach US$ 304 billion by 2025 registering a CAGR of 9.3%. The demand for chemicals is expected to expand by 9% per annum by 2025. The chemical industry is expected to contribute US$ 300 billion to India’s GDP by 2025. An investment of Rs. 8 lakh crore (US$ 107.38 billion) is estimated in the Indian chemicals and petrochemicals sector by 2025. In April 2021, production of key chemicals was 850,622 MT and petrochemicals was 1,868,939 MT. The Indian specialty chemicals sector is expected to increase at a CAGR of 12.4%, from US$ 32 billion in 2019 to an estimated US$ 64 billion by 2025. The specialty chemicals constitute 22% of the total chemicals and petrochemicals market in India. The demand for specialty chemicals is expected to rise at a 12% CAGR in 2019-22. The petrochemicals demand is expected to record a 7.5% CAGR between 2019 and 2023, with polymer demand increasing at 8%. The Indian agrochemicals market was worth ~US$ 4.5 billion in July 2021bh. According to Expert Market Research (EMR), the market is expected to increase at a CAGR of 8.6% between 2021 and 2026 to reach ~US$ 7.4 billion.
As of June 2021, Reliance Industries (RELI.NS), which operates the world's largest refining facility in Jamnagar, Gujarat, plans to invest US$ 10.1 billion in clean energy over the next three years to become a net carbon zero corporation by 2035. In January 2020, Ultramarine & pigments have successfully commissioned the Sulphonation plant setup in Nellore, Andhra Pradesh, to manufacture surfactants and specialty chemicals. In December 2020, Bhoramdev Cooperative Sugar Factory Kawardha and Chhattisgarh Distillery’s subsidiary NKJ Biofuel signed a memorandum of understanding (MoU) for the country's first ethanol plant to be set up in the state under the public-private partnership (PPP) model. In November 2020, Indian companies are witnessing interest from strategic investors led by Japan, Korea and Thailand, as they seek to diversify supply chains from China. This includes large deals in FY 2020—KKR’s $414 million acquisition of JB Chemicals and Pharmaceuticals Ltd. and Carlyle’s $210 million acquisition of SeQuent Scientific Ltd. On November 06, 2020, HIL (Hindustan Insecticides Limited) signed a memorandum of understanding with the Department of Chemicals & Petro Chemicals to achieve revenue target of Rs. 451 crore (US$ 60.86 million). On November 04, 2020, Pidilite Industries acquired Huntsman Group's Indian subsidiary for Rs. 2,100 crore (US$ 283.38 million) to strengthen adhesives and sealants portfolio that will complement the company's retail portfolio.
Despite the current pandemic situation, the Indian chemical industry has numerous opportunities considering the supply chain disruption in China and trade conflict among the US, Europe and China. Anti-pollution measures in China will also create opportunities for the Indian chemical industry in specific segments. Additional support, in terms of fiscal incentives, such as tax breaks and special incentives through PCPIRs or SEZs to encourage downstream units will enhance production and development of the industry. The dedicated integrated manufacturing hubs under Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIR) policy to attract an investment of Rs. 20 lakh crore (US$ 276.46 billion) by 2035. To bring about structural changes in the working of domestic chemical industry, future investments should not only focus on transportation of fuels such as petrol and diesel, but also on crude-to-chemicals complexes or refineries set up to cater to the production of chemicals.
RBSA Advisors, Department of Chemicals and Petrochemicals, India Chem report 2020, Dyestuffs Manufacturers Association of India
The products of the chemical industry can be divided into three categories:
Basic chemicals
Speciality chemicals
Consumer chemicals
Several other categorisations are used but this one is simple and helpful in the context of this web site. Outputs range widely, with basic chemicals produced in huge quantities (millions of tonnes) and some speciality chemicals produced in modest kilogramme quantities but with very high value. As explained in the unit on Chemical Reactors, the choice of reactor is often goverened by the amount of chemical that is to be produced.
Basic chemicals are divided into
chemicals derived from oil, known as petrochemicals
polymers
basic inorganics
The term ‘petrochemical’ can be misleading as the same chemicals are increasingly being derived from sources other than oil, such as coal and biomass. An example is methanol, commonly produced from oil and natural gas in the US and Europe but from coal in China. Another is ethene, derived from oil and gas in the US and Europe but increasingly from biomass in Brazil. Other examples are described in the units on this web site.
Basic chemicals, produced in large quantities, are mainly sold within the chemical industry and to other industries before becoming products for the general consumer. For example, ethanoic acid is sold on to make esters, much of which in turn is sold to make paints and at that point sold to the consumer. Huge quantities of ethene are transported as a gas by pipeline around Europe and sold to companies making poly(ethene) and other polymers. These are then sold on to manufacturers of plastic components before being bought by the actual consumer. Figure 3 shows a plant producing chemicals which it then immediately uses to manufacture other chemicals..
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The production of chemicals from petroleum (and increasingly from coal and biomass) has seen many technological changes and the development of very large production sites throughout the world. The hydrocarbons in crude oil and gas, which are mainly straight chain alkanes, are first separated using their differences in boiling point, as is described in the unit Distillation. They are then converted to hydrocarbons that are more useful to the chemical industry, such as branched chain alkanes, alkenes and aromatic hydrocarbons. These processes are described in the unit, Cracking and related refinery processes. In turn, these hydrocarbons are converted into a very wide range of basic chemicals which are immediately useful (petrol, ethanol, ethane-1,2-diol) or are subjected to further reactions to produce a useful end product (for example, phenol to make resins and ammonia to make fertilizers). Many examples are found in the group of units on this web site devoted to Basic chemicals. The main use for petrochemicals is in the manufacture of a wide range of polymers. Due to their importance of these they are given their own section of units, Polymers
These are relatively low cost chemicals used throughout manufacturing and agriculture. They are produced in very large amounts, some in millions of tonnes a year, and include chlorine, sodium hydroxide, sulfuric and nitric acids and chemicals for fertilizers. As with petrochemicals, many emerging countries are now able to produce them more cheaply than companies based in the US and Europe. This has led to tough competition and producers of these chemicals worldwide work continuously to reduce costs while meeting ever more stringent environmental and safety standards.
This category covers a wide variety of chemicals for crop protection, paints and inks, colorants (dyes and pigments). It also includes chemicals used by industries as diverse as textiles, paper and engineering. There has been a tendency in the US and Europe to focus on this sector rather than the basic chemicals discussed above because it is thought that, with active research and development (R & D), speciality chemicals deliver better and more stable profitability. New products are being created to meet both customer needs and new environmental regulations. An everyday example is household paints which have evolved from being organic solvent-based to being water-based. Another is the latest ink developed for ink-jet printers.
Units on selected speciality chemicals can be found within the Materials and Applications section of this site.
Consumer chemicals are sold directly to the public. They include, for example, detergents, soaps and other toiletries. The search for more effective and environmentally safe detergents has increased over the last 20 years, particularly in finding surfactants that are capable of cleaning anything from sensitive skin to large industrial plants. Parallel to this, much work has been done in producing a wider range of synthetic chemicals for toiletries, cosmetics and fragrances
The chemical industry is a very important contributor to the wealth of a country. For example it contributes over 1% to the Gross National Product (GNP) of European countries, which is over 6% of the total GNP produced by all manufacturing industries. Generally personnel in the industry are among the most well rewarded of all manufacturing industries because the industry has the largest proportion of highly qualified people and generally it is the most productive.
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